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Informist, Thursday, Oct. 30, 2025

 

NEW DELHI – The US Federal Open Market Committee Wednesday voted to cut the federal funds target range by 25 basis points for the second meeting in a row to 3.75-4.00%. However, the vote showed a divided house – Federal Reserve Governor Stephen Miran voted for 50 basis points rate cut while Federal Reserve Bank of Kansas City head Jeffrey Schmid voted to keep the policy rate unchanged.

 

The rate decision was universally expected ahead of the meeting as US Federal Reserve officials have guided for a policy rate of 3.50-3.75% by the end of 2025. In a closely watched move, the panel also decided to conclude the US Fed's monthly sales of securities from Dec. 1. The 10-year US Treasury yield was at 4.04% at 0006 IST, little changed after the FOMC announcement but reacting to remarks from Federal Reserve Chair Jerome Powell in the post-policy press conference.

 

The committee said economic activity had been expanding at a moderate pace, while job gains had slowed. The unemployment rate had edged up but remained low through August and more recent indicators were consistent with those developments, the FOMC said. In the latest government data, the US economy added only 22,000 jobs in August and the unemployment rate rose to 4.3%, the highest in nearly four years. The September data was not released amid the ongoing partial shutdown of the US government.

 

Meanwhile, the committee said that inflation had moved up since earlier in 2025 and remains "somewhat elevated". US CPI rose 0.3% on month in September and the annual inflation rate rose to 3.0%, after bottoming at 2.3% in April. The FOMC seeks to achieve maximum employment and inflation at 2% over the longer run.

 

"The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months," its statement said. "In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks." 

 

The FOMC flagged that uncertainty about the economic outlook remained high, but reiterated its strong commitment to its jobs and inflation objectives. US President Donald Trump has imposed sweeping tariffs on imports from major trading partners, but has spent the past few weeks signing trade agreements. Just this week, he agreed to trade deals with Japan, the world's third-largest economy, and some South East Asian nations. The tariffs were expected to sharply push up inflation in the US, but no shock has been reflected in the data yet, according to US Fed officials. Trump has also pushed for a quicker pace of rate cuts from the Fed, and is embroiled in a legal battle to remove one of the FOMC members.

 

Separately, the Fed has been trimming its balance sheet by $40 billion every month in Treasury and mortgage-backed securities since Apr. 1, gradually reducing the pace from the $95 billion a month run-off it began in June 2022. The Fed's move to stop the sales was expected as US bank reserves, seen as a key determinant for the decision, had shrunk for eight straight weeks and fallen below the psychologically crucial $3 trillion mark in early October.

 

The FOMC's meeting this week was not associated with the release of a Summary of Economic Projections, where Fed officials chart their estimates for key economic indicators and the Fed funds target range. The committee is next scheduled to meet on Dec. 9-10, its last meeting in 2025.  End

 

US$1 = INR 88.1950

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Deepshikha Bhardwaj

 

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